No. 13-306
In the Supreme Court of the United States
LIBERTY UNIVERSITY, ET AL., PETITIONERS
v.
JACOB J. LEW, SECRETARY OF THE TREASURY, ET AL.
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
BRIEF FOR THE RESPONDENTS IN OPPOSITION
DONALD B. VERRILLI, JR.
Solicitor General
Counsel of Record
STUART F. DELERY
Assistant Attorney General
MARK B. STERN
ALISA B. KLEIN
Attorneys
Department of Justice
Washington, D.C. 20530-0001
SupremeCtBriefs@usdoj.gov
(202) 514-2217
QUESTIONS PRESENTED
The employer responsibility provision of the Patient Protection and Affordable Care Act, Pub. L. No.
111-148, 124 Stat. 119, amended by the Health Care
and Education Reconciliation Act of 2010, Pub. L. No.
111-152, 124 Stat. 1029, will require that, under certain circumstances, an assessable payment will be
imposed on a large employer that does not offer adequate health insurance coverage to its full-time employees. 26 U.S.C. 4980H (Supp. V 2011). The minimum coverage provision of the Act will require that
non-exempted individuals maintain a minimum level of
health insurance or pay a tax penalty. 26 U.S.C.
5000A (Supp. V 2011). The questions presented are:
1. Whether the court of appeals had jurisdiction to
consider petitioners’ claims.
2. Whether the employer responsibility provision is
authorized by Congress’s taxing power and, independently, by Congress’s commerce power.
3. Whether the employer responsibility and minimum coverage provisions violate petitioners’ rights
under the Free Exercise Clause of the First Amendment or the Religious Freedom Restoration Act of
1993, 42 U.S.C. 2000bb et seq.
4. Whether the court of appeals acted within its
discretion when it declined to consider challenges to
preventive-services coverage regulations that petitioners attempted to raise for the first time in the
court of appeals after a remand from this Court.
(I)
TABLE OF CONTENTS
Page
Opinions below ................................................................................ 1
Jurisdiction ...................................................................................... 1
Statement ......................................................................................... 2
Argument ....................................................................................... 12
Conclusion ...................................................................................... 26
TABLE OF AUTHORITIES
Cases:
Bailey v. Drexel Furniture Co., 259 U.S. 20 (1922)........ 9, 15
Church of Lukumi Babalu Aye, Inc. v.
City of Hialeah, 508 U.S. 520 (1993) .................................. 20
City of Boerne v. Flores, 521 U.S. 507 (1997) ...................... 20
Clapper v. Amnesty Int’l USA, 133 S. Ct. 1138 (2013)....... 23
Employment Div., Dep’t of Human Res. v. Smith,
494 U.S. 872 (1990) ..................................................... 9, 10, 20
Gonzales v. Raich, 545 U.S. 1 (2005) .................................... 17
National Fed’n of Indep. Bus. v. Sebelius, 132 S. Ct.
2566 (2012) .................................................................... passim
NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1
(1937) ...................................................................................... 16
Singleton v. Wulff, 428 U.S. 106 (1976) ................................ 11
United States v. Darby, 312 U.S. 100 (1941) ....................... 16
United States v. La Franca, 282 U.S. 568 (1931) ................ 13
United States v. Lee, 455 U.S. 252 (1982)............................. 21
United States v. Lopez, 514 U.S. 549 (1995) ........................ 17
United States v. Morrison, 529 U.S. 598 (2000) ............ 17, 18
United States v. Reorganized CF & I Fabricators of
Utah, Inc., 518 U.S. 213 (1996) ........................................... 13
(III)
IV
Constitution, statutes and regulations:
U.S. Const.:
Art. I ................................................................................. 4, 7
Art. III .................................................................................. 6
Amend. I ......................................................................... 5, 11
Establishment Clause ......................................... 4, 5, 11
Free Exercise Clause ......................... 4, 5, 9, 11, 19, 20
Amend. V ........................................................................ 5, 11
Due Process Clause .................................................... 11
Equal Protection Clause .............................................. 4
Americans with Disabilities Act of 1990,
42 U.S.C. 12101 et seq. ........................................................ 17
Anti-Injunction Act, 26 U.S.C. 7421(a) ......................... 2, 6, 21
Civil Rights Act of 1964, Tit. VII, 42 U.S.C.
2000e et seq. .......................................................................... 17
Employee Retirement Income Security Act of 1974,
29 U.S.C. 1001 et seq. ..................................................... 15, 17
29 U.S.C. 1185d (Supp. V 2011) ....................................... 15
Fair Labor Standards Act of 1938, 29 U.S.C.
201 et seq. .............................................................................. 16
Health Care and Education Reconciliation Act
of 2010, Pub. L. No. 111-152, 124 Stat. 1029 ....................... 2
Internal Revenue Code (26 U.S.C.):
§ 275(a)(6) .......................................................................... 22
§ 1402(g) ...................................................................... 20, 21
§ 1402(g)(1) ........................................................................ 20
National Labor Relations Act, 29 U.S.C. 151 et seq. ......... 17
V
Statutes and regulations—Continued:
Page
Patient Protection and Affordable Care Act,
Pub. L. No. 111-148, 124 Stat. 119............................. passim
26 U.S.C. 36B(c)(2)(C) (Supp. V 2011) ............................. 3
26 U.S.C. 4980H (Supp. V 2011) ............................. passim
26 U.S.C. 4980H(a) (Supp. V 2011) ................... 3, 4, 16, 23
26 U.S.C. 4980H(b) (Supp. V 2011) ............................... 3, 4
26 U.S.C. 4980H(b)(1) (Supp. V 2011) ........................ 4, 16
26 U.S.C. 4980H(b)(2) (Supp. V 2011) ............ 4, 14, 16, 22
26 U.S.C. 4980H(c)(1) (Supp. V 2011)......................... 3, 16
26 U.S.C. 4980H(c)(2)(D) (Supp. V 2011) ......................... 3
26 U.S.C. 4980H(c)(2)(D)(i) (Supp. V 2011) ................... 16
26 U.S.C. 4980H(c)(7) (Supp. V 2011)....................... 14, 22
26 U.S.C. 5000A (Supp. V 2011) ............................. passim
26 U.S.C. 5000A(a) (Supp. V 2011) ................................. 14
26 U.S.C. 5000A(d)(2)(A) (Supp. V 2011) ....................... 20
26 U.S.C. 5000A(d)(2)(B) (Supp. V 2011) ....................... 20
26 U.S.C. 5000A(f)(2) (Supp. V 2011) ......................... 3, 23
26 U.S.C. 5000A(f)(2)-(3) (Supp. V 2011) ....................... 23
26 U.S.C. 5000A(f)(3) (Supp. V 2011) ......................... 3, 23
42 U.S.C. 300gg-13 (Supp. V 2011) ........................... 11, 24
42 U.S.C. 18023(a)(1) (Supp. V 2011) .............................. 19
42 U.S.C. 18023(b)(1)(A)(i) (Supp. V 2011) .............. 10, 19
42 U.S.C. 18023(b)(1)(B)(i) (Supp. V 2011) .............. 11, 19
42 U.S.C. 18023(b)(2)(A)-(B) (Supp. V 2011) ........... 11, 19
42 U.S.C. 18054(a)(6) (Supp. V 2011) ........................ 10, 19
42 U.S.C. 18081(f)(2)(A) (Supp. V 2011) ......................... 22
Religious Freedom Restoration Act of 1993,
42 U.S.C. 2000bb et seq. ................................ 4, 10, 19, 25, 26
42 U.S.C. 2000bb-1(a) ....................................................... 10
42 U.S.C. 2000bb-1(b) ....................................................... 10
VI
Regulation—Continued:
Page
78 Fed. Reg. 39,525 (July 1, 2013) (to be codified at
45 C.F.R. 155.605(g)) ............................................................ 24
Miscellaneous:
78 Fed. Reg. 39,871 (July 2, 2013) ......................................... 25
I.R.S. Notice 2013-45, 2013-31 I.R.B. 116 .......................... 2, 3
In the Supreme Court of the United States
No. 13-306
LIBERTY UNIVERSITY, ET AL., PETITIONERS
v.
JACOB J. LEW, SECRETARY OF THE TREASURY, ET AL.
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
BRIEF FOR THE RESPONDENTS IN OPPOSITION
OPINIONS BELOW
The opinion of the court of appeals (Pet. App. 1a75a) is not yet reported but is available at 2013 WL
3470532. The opinion of the district court is reported
at 753 F. Supp. 2d 611. An earlier opinion of the court
of appeals is reported at 671 F.3d 391. An order of
this Court vacating that earlier court of appeals decision and remanding to the court of appeals is reported
at 133 S. Ct. 679.
JURISDICTION
The judgment of the court of appeals was entered
on July 11, 2013. The petition for a writ of certiorari
was filed on September 5, 2013. The jurisdiction of
this Court is invoked under 28 U.S.C. 1254(1).
(1)
2
STATEMENT
1. As relevant here, the Patient Protection and Affordable Care Act (Act), Pub. L. No. 111-148, 124 Stat.
119,1 provides that, beginning in 2014, a non-exempted
individual who fails to maintain minimum essential
health coverage must make a specified payment to the
Internal Revenue Service (IRS). See 26 U.S.C. 5000A
(minimum coverage provision).2 In National Federation of Independent Business v. Sebelius, 132 S. Ct.
2566 (2012) (NFIB), this Court held that the AntiInjunction Act, 26 U.S.C. 7421(a), does not bar a preenforcement challenge to Section 5000A. See 132 S.
Ct. at 2582-2584. The Court also held that individuals
have the “lawful choice” to make payment to the IRS
under Section 5000A “in lieu of buying health insurance,” id. at 2597, 2600, and upheld the minimum
coverage provision as a valid exercise of Congress’s
taxing power. See id. at 2593-2600.
The Act also amended the Internal Revenue Code
to provide that employers with 50 or more full-timeequivalent employees must make a payment to the
IRS in specified circumstances. See 26 U.S.C. 4980H
(employer responsibility provision). 3 The amount of
1
Amended by the Health Care and Education Reconciliation Act
of 2010, Pub. L. No. 111-152, 124 Stat. 1029.
2
All citations in this brief to provisions of the Act codified in the
United States Code are to Supplement V 2011.
3
As a transitional measure, the Department of the Treasury
announced in July that the employer responsibility provision will
not apply until 2015. See I.R.S. Notice 2013-45, 2013-31 I.R.B. 116.
The Department explained that this transitional period would
“provide additional time for input from employers and other
reporting entities in an effort to simplify information reporting
consistent with effective implementation of the law” and “provide
employers, insurers, and other providers of minimum essential
3
the large-employer tax depends on whether the tax is
imposed under subparagraph (a) or subparagraph (b)
of Section 4980H. Subparagraph (a) imposes a tax on
a large employer that does not offer its full-time employees and their dependents minimum essential coverage under an eligible employer-sponsored plan, if
one or more of the full-time employees receive a federal premium tax credit or cost-sharing reduction for
health coverage purchased by the employees on a
health insurance exchange. Subparagraph (a) defines
“minimum essential coverage under an eligible employer-sponsored plan” to include coverage under any
employer-sponsored plan, with certain exceptions that
are not relevant here. See 26 U.S.C. 4980H(a) (crossreferencing the definition of “minimum essential coverage” under an “eligible employer-sponsored plan” in
26 U.S.C. 5000A(f)(2) and referencing the exceptions
in 26 U.S.C. 5000A(f)(3)). If a tax is imposed under
subparagraph (a), the employer’s monthly tax liability
is calculated by multiplying the number of full-time
employees (less 30) by $167. See 26 U.S.C. 4980H(a),
(c)(1) and (2)(D).
Subparagraph (b) of Section 4980H imposes a tax
on a large employer that offers its full-time employees
and their dependents health coverage under an eligible employer-sponsored plan, if that coverage is not
affordable or does not provide minimum value, and if
one or more full-time employees receive a premium
tax credit or cost-sharing reduction for health coverage purchased on an exchange.
See 26 U.S.C.
36B(c)(2)(C) (affordability and minimum value criteria) and 26 U.S.C. 4980H(b). If a tax is imposed under
coverage time to adapt their health coverage and reporting systems.” Ibid.
4
subparagraph (b), the employer’s monthly tax liability
is calculated by multiplying $250 by the number of
full-time employees who receive a premium tax credit
or cost-sharing reduction for health coverage purchased on an exchange. See 26 U.S.C. 4980H(b)(1).
This tax liability is capped so that the “aggregate
amount of tax” cannot exceed the amount a large
employer would owe under subparagraph (a) if it did
not offer its full-time employees and their dependents
any health coverage at all. See 26 U.S.C. 4980H(b)(2).
2. a. Petitioner Liberty University brought this
suit in its capacity as a large employer that “offers
healthcare coverage to its full-time employees.” 2d
Am. Compl. ¶ 62. The University alleged that the
employer responsibility provision exceeds Congress’s
Article I authority and violates the University’s rights
under the Free Exercise Clause, the Equal Protection
Clause, and the Religious Freedom Restoration Act of
1993 (RFRA), 42 U.S.C. 2000bb et seq. The two individual petitioners, Michele Waddell and Joanne Merrill, alleged that the minimum coverage provision
exceeds Congress’s Article I authority and violates
their rights under the Free Exercise Clause, the
Equal Protection Clause, and RFRA. They also alleged that certain exemptions in the minimum coverage provision violate the Establishment Clause. 2d
Am. Compl. ¶¶ 102-113, 126-170.
The district court rejected all of petitioners’ claims
on the merits and dismissed the complaint for failure
to state a claim. See 753 F. Supp. 2d 611.
b. On petitioners’ appeal, the court of appeals held
that the Anti-Injunction Act bars pre-enforcement
challenges to the minimum coverage provision and the
employer responsibility provision. The court of ap-
5
peals thus vacated the district court’s judgment and
remanded with instructions to dismiss the complaint
for lack of jurisdiction. See 671 F.3d 391, 397-398.
c. Petitioners filed a petition for a writ of certiorari, which this Court held pending its decision in NFIB.
The day after the Court decided NFIB, it denied the
petition for a writ of certiorari in this case. See 133
S. Ct. 60 (2012).
d. Petitioners filed a petition for rehearing of the
order denying their petition for a writ of certiorari.
Their rehearing petition asked that this Court instead
grant the certiorari petition, vacate the court of appeals’ decision, and remand the case for further consideration in light of NFIB. See No. 11-438, 2012 WL
3027174 (pet. for reh’g). Petitioners’ rehearing petition explained that such a remand would allow the
court of appeals to address their challenges to the
employer responsibility provision and their claim that
the minimum coverage provision violates their rights
under the First Amendment’s Free Exercise and
Establishment Clauses and the equal protection component of the Fifth Amendment. See id. at *1. The
government did not oppose petitioners’ request. See
No. 11-438, 2012 WL 5361525 (resp. to pet. for reh’g).
The government informed this Court that, in its view,
the Anti-Injunction Act bars petitioners’ challenge to
the employer responsibility provision (but not the
minimum coverage provision), and that petitioners’
claims also failed on the merits. See id. at *3-*4. But
the government agreed that the court of appeals
should address those questions in the first instance.
See id. at *4-*5.
This Court subsequently reconsidered its denial of
certiorari, granted the petition, vacated the court of
6
appeals’ decision, and remanded for further consideration in light of NFIB. See 133 S. Ct. 679 (2012).
3. On remand from this Court, the court of appeals
affirmed the judgment of the district court. Pet. App.
1a-75a.
a. As a threshold matter, the court of appeals rejected the government’s contention that Liberty University’s pre-enforcement challenge to the employer
responsibility provision is barred by the AntiInjunction Act. See Pet. App. 25a-30a. That statute
provides, with exceptions inapplicable here, that “no
suit for the purpose of restraining the assessment or
collection of any tax shall be maintained in any court
by any person, whether or not such person is the person against whom such tax was assessed.” 26 U.S.C.
7421(a). The court recognized that (in contrast to the
minimum coverage provision) Congress expressly
described the assessment in Section 4980H as a “tax,”
but nonetheless held that the Anti-Injunction Act is
inapplicable because Congress also referred to the
assessment by other terms such as “assessable payment.” Pet. App. 27a-29a.
b. The court of appeals also rejected the government’s contention that none of the petitioners established the certainly impending injury that is necessary
for Article III standing. See Pet. App. 30a-35a.
The court of appeals acknowledged that the government “may well be correct” that “it is speculative
whether Liberty will be subject to an assessable payment under 26 U.S.C. § 4980H.” Pet. App. 31a; see id.
at 31a n.5 (noting that Liberty’s employer-provided
health plan “by definition * * * appears to meet
the ‘minimum essential coverage’ requirement” and
that it was speculative whether the plan would be
7
deemed not to provide “affordable coverage”). The
court of appeals nonetheless concluded that Liberty
has standing because it alleged that the employer
responsibility provision will “increase the cost of care
and directly and negatively affect [Liberty] by increasing the cost of providing health insurance coverage.” Id. at 32a (internal quotation marks omitted).
The court also concluded that this alleged injury “is
imminent even though the employer mandate will not
go into effect until January 1, 2015, as Liberty must
take measures to ensure compliance in advance of that
date.” Id. at 33a.
The court of appeals similarly concluded that the
individual petitioners have standing. Pet. App. 35a.
The government had argued that those individuals
“lack standing because they may be exempt from the
individual mandate penalty, either because their income is below the mandate’s threshold level or because they qualify for a proposed hardship exemption.” Id. at 34a. The court, however, thought it sufficient that the individuals “allege the individual mandate will obligate them to buy insurance or pay a penalty, and their alleged lack of insurance provides sufficient support for that allegation at this stage of the
proceedings.” Id. at 34a-35a.
c. After resolving those threshold questions, the
court of appeals rejected petitioners’ claims on the
merits. Pet. App. 35a-75a.
i. The court of appeals held that Congress had two
independent bases of authority under Article I of the
Constitution to enact the employer responsibility
provision: its commerce power and its taxing power.
Pet. App. 35a-57a.
8
With respect to the commerce power, the court of
appeals concluded that the employer responsibility
provision “is simply another example of Congress’s
longstanding authority to regulate employee compensation offered and paid for by employers in interstate
commerce.” Pet. App. 42a. The court rejected petitioners’ attempt to liken the employer responsibility
provision to the minimum coverage provision at issue
in NFIB, reasoning that, “[i]n contrast to individuals,
all employers are, by their very nature, engaged in
economic activity.” Id. at 43a. Because the employer
responsibility provision “regulates existing economic
activity (employee compensation),” the court concluded that it “stands on quite a different footing from”
the minimum coverage provision. Id. at 44a. The
court further held that, like other forms of employee
compensation, employer-provided health coverage
substantially affects interstate commerce. Id. at 44a48a.
With respect to the taxing power, the court of appeals concluded that the “NFIB taxing power analysis
inevitably leads to the conclusion that the employer
mandate exaction, too, is a constitutional tax.” Pet.
App. 49a. The court determined that “it is clear from
the provision’s face that it possesses the ‘essential
feature’ of any tax: ‘it produces at least some revenue
for the Government.’ ” Id. at 54a (quoting NFIB, 132
S. Ct. at 2594). The court noted in this regard that the
Congressional Budget Office had estimated that payments by employers to the government would come to
$11 billion annually by 2019. Ibid.
Turning to the “ ‘functional’ characteristics” of the
employer responsibility provision, the court of appeals
determined that it “looks like a tax in many respects.”
9
Pet. App. 54a (quoting NFIB, 132 S. Ct. at 2594-2595)
(internal quotation marks omitted). The court noted
that “[t]he exaction is paid into the Treasury, ‘found in
the Internal Revenue Code[,] and enforced by the
IRS,’ which ‘must assess and collect it in the same
manner as’ a tax.” Ibid. (quoting NFIB, 132 S. Ct. at
2594). The court further explained that the employer
responsibility provision has none of the characteristics
of the exaction that this Court invalidated as a penalty
in Bailey v. Drexel Furniture Co., 259 U.S. 20 (1922).
See Pet. App. 55a-56a. The court explained that the
employer responsibility provision “lacks a scienter
requirement, does not punish unlawful conduct, and
leaves large employers with a choice for complying
with the law—provide adequate, affordable health
coverage to employees or pay a tax.” Id. at 55a.
“Moreover,” the court concluded, the amount of the
exaction “is proportionate rather than punitive.” Id.
at 56a.
ii. The court of appeals also rejected petitioners’
religion-based challenges to the employer responsibility provision and the minimum coverage provision.
Both were premised on petitioners’ objection to “facilitating, subsidizing, easing, funding, or supporting
. . . abortions.” Pet. App. 58a; see id. at 57a-68a.
The court of appeals concluded that petitioners’
contention that both provisions violated the Free
Exercise Clause lacked merit. Pet. App. 58a-59a. The
court noted that “the Clause does not compel Congress to exempt religious practices from a ‘valid and
neutral law of general applicability.’ ” Id. at 59a (quoting Employment Div., Dep’t of Human Res. v. Smith,
494 U.S. 872, 879 (1990)). The court explained that the
10
Act is a “neutral law of general applicability” and does
not “set apart any particular religious group.” Ibid.
The court of appeals also rejected petitioners’ challenges to the employer responsibility and minimum
coverage provisions under RFRA. See Pet. App. 59a63a. The court explained that RFRA “directs application of strict scrutiny only if the Government ‘substantially burden[s]’ religious practice.” Id. at 60a (quoting 42 U.S.C. 2000bb-1(a) and (b)). Here, the court
concluded that petitioners “present no plausible claim
that the Act substantially burdens their free exercise
of religion, by forcing them to facilitate or support
abortion or otherwise.” Ibid.
The court of appeals pointed out that “[t]he Act
specifically provides individuals the option to purchase
a plan that covers no abortion services except those
for cases of rape or incest, or where the life of the
mother would be endangered.” Pet. App. 60a-61a
(citing 42 U.S.C. 18054(a)(6) (requiring that at least
one plan on each exchange exclude non-excepted abortions from coverage)). The court noted that the “Act
also does nothing to prevent employers from providing such a plan.” Id. at 61a. It further explained that
“the Act allows an individual to obtain, and an employer to offer, a plan that covers no abortion services
at all, not even excepted services.” Ibid. (citing 42
U.S.C. 18023(b)(1)(A)(i)).
The court of appeals noted petitioners’ claim that
the Act requires “that individuals and employers pay
at least one dollar per person per month directly into
an account to cover elective abortions[.]” Pet. App.
61a n.9 (citation omitted). But the court explained
that petitioners were factually mistaken: the provision petitioners cited “applies only if individuals
11
choose to enroll in a plan through a health insurance
exchange that elects to cover abortions, for which
federal funding may not be used.” Ibid. (emphasis
added) (citing 42 U.S.C. 18023(b)(1)(B)(i) and (2)(A)(B)).
The court of appeals rejected petitioners’ contention that the two religious exemptions in the minimum
coverage provision violate the First Amendment’s
Free Exercise and Establishment Clauses and the
equal protection component of the Fifth Amendment’s
Due Process Clause. See Pet. App. 63a-68a. It explained that the exemptions accommodate religious
practices to the extent consistent with the Congress’s
objectives and do not target religion for disfavored
treatment or differentiate between religious sects.
Ibid.
Finally, the court of appeals declined to address
petitioners’ challenges to preventive-services coverage
regulations that implement a different provision of the
Act, 42 U.S.C. 300gg-13. See Pet. App. 68a-75a. The
court noted that petitioners did not present that challenge in their second amended complaint, their district court briefs, their first appeal, or their previous
filings in this Court. See id. at 69a-70a. Instead,
petitioners attempted to assert this claim “for the first
time in their post-remand briefs.” Id. at 70a. The
court explained that, as a general matter, “a federal
appellate court does not consider an issue not passed
upon below.” Id. at 70a-71a (quoting Singleton v.
Wulff, 428 U.S. 106, 120 (1976)). Although the court
recognized that it had “discretion” to make an exception to that default rule under “limited circumstances,” it explained that petitioners had not “contend[ed]
12
that any of these ‘limited circumstances’ ” apply here.
Id. at 71a.
The court of appeals observed that the regulations
containing the contraceptive-coverage requirement
that petitioners sought to challenge had not been
issued at the time petitioners filed their complaint.
Pet. App. 72a. But, the court reasoned, “a new implementing regulation cannot ‘become a vehicle for
converting plaintiffs’ lawsuit into a challenge to the
new regulation’ when a ‘challenge to th[at] regulation
would raise substantially different legal issues from
the . . . arguments [already] propounded in th[e]
lawsuit.” Ibid.
The court of appeals also noted several additional
“compelling reasons” against considering petitioner’s
belated argument. Pet. App. 72a. First, adjudicating
petitioners’ challenge to the contraceptive-coverage
requirement “would require [the court] not only to
resolve a claim not considered below, but also to do
this in a second appeal three years after the initiation
of this lawsuit.” Ibid. It would also require interpretation of regulations “implementing a provision of the
Act never challenged” in petitioners’ complaint, at the
same time that other circuits were considering that
issue “in cases in which plaintiffs have properly pled
the issue and a district court has addressed it.” Id. at
72a, 74a (citing cases).
ARGUMENT
Petitioners renew their myriad enumerated-power
and religion-based challenges to various provisions of
the Patient Protection and Affordable Care Act, Pub.
L. No. 111-148, 124 Stat. 119. The court of appeals
correctly rejected (or properly exercised its discretion
not to address) those claims. Its decision does not
13
conflict with any decision of this Court or another
court of appeals. In addition, there are threshold
jurisdictional defects that would prevent this Court
from reaching petitioners’ claims even if they otherwise merited consideration. Further review is not
warranted.
1. The court of appeals correctly held that the employer responsibility provision, 26 U.S.C. 4980H, is
authorized by both Congress’s taxing power and its
commerce power. Neither independent ground for the
court’s decision conflicts with any decision of another
court of appeals. Indeed, the decision below is the
only one by a court of appeals even addressing an
enumerated-power challenge to Section 4980H.
a. Section 4980H is a proper exercise of Congress’s
taxing power. In National Federation of Independent
Business v. Sebelius, 132 S. Ct. 2566 (2012), this Court
explained that, “[i]n distinguishing penalties from
taxes” for purposes of determining whether an exaction is a proper exercise of the taxing power, the relevant question is whether the exaction imposes “punishment for an unlawful act or omission.” Id. at 2596
(quoting United States v. Reorganized CF & I Fabricators of Utah, Inc., 518 U.S. 213, 224 (1996)); see
ibid. (“[A] penalty, as the word is here used, is an
exaction imposed by statute as punishment for an
unlawful act.”) (quoting United States v. La Franca,
282 U.S. 568, 572 (1931)).
The Court held that the assessment provided in
Section 5000A is not punishment for an unlawful act or
omission, even though Congress described the assessment “as a ‘penalty,’ not a ‘tax,’ ” NFIB, 132 S. Ct.
at 2594, and even though Section 5000A states that an
individual “ ‘shall’ maintain health insurance,” id. at
14
2593 (quoting 26 U.S.C. 5000A(a)). The Court explained that, although Section 5000A “clearly aims to
induce the purchase of health insurance, it need not be
read to declare that failing to do so is unlawful.” Id. at
2596-2597. The Court emphasized that “[n]either the
Act nor any other law attaches negative legal consequences to not buying health insurance, beyond requiring a payment to the IRS.” Id. at 2597. And the
Court explained that “[t]his process yields the essential feature of any tax: it produces at least some revenue for the Government.” Id. at 2594 (citation omitted) (noting estimate of the Congressional Budget
Office (CBO) that the Section 5000A payment is expected to raise about $4 billion per year by 2017).
The constitutionality of Section 4980H as a proper
exercise of Congress’s taxing power follows a fortiori
from NFIB. Congress described the exaction in Section 5000A “as a ‘penalty,’ not a ‘tax,’ ” but the Court
held that the choice of “label” “does not determine
whether the payment may be viewed as an exercise of
Congress’s taxing power.” NFIB, 132 S. Ct. at 2594.
Here, reliance on that principle is not necessary because Congress referred to the payment in Section
4980H as a “tax,” see 26 U.S.C. 4980H(b)(2) (capping
the “aggregate amount of tax”); 26 U.S.C. 4980H(c)(7)
(providing that the “tax imposed by” Section 4980H is
“nondeductible”).
Section 5000A states that an individual “shall”
maintain a minimum level of health coverage, see
NFIB, 132 S. Ct. at 2593, but the Court held that,
“[g]ranting * * * the full measure of deference
owed to federal statutes,” the provision could reasonably be read to “establish[] a condition—not owning
health insurance—that triggers a tax,” id. at 2594.
15
Here, no such deference is required because Section
4980H includes no comparable “shall” provision.
There is thus no doubt that Section 4980H does not
make a large employer’s failure to offer coverage
“unlawful.” Id. at 2597. Moreover, like Section
5000A, Section 4980H has “the essential feature of any
tax: it produces at least some revenue for the Government.” Id. at 2594. The CBO projected that the
large-employer tax will raise $11 billion per year by
2019. See Pet. App. 54a.
Contrary to petitioners’ assertion (Pet. 25-28), Section 4980H has none of the “three practical characteristics of the so-called tax on employing child laborers”
that convinced the Court that “the ‘tax’ was actually a
penalty” in Bailey v. Drexel Furniture Co., 259 U.S.
20 (1922). See NFIB, 132 S. Ct. at 2595. First, the
statute at issue in Drexel Furniture “imposed an
exceedingly heavy burden—10 percent of a company’s
net income—on those who employed children, no matter how small their infraction.” Ibid. Second, it “imposed that exaction only on those who knowingly employed underage laborers,” and this Court noted that
“[s]uch scienter requirements are typical of punitive
statutes, because Congress often wishes to punish
only those who intentionally break the law.” Ibid.
Third, “this ‘tax’ was enforced in part by the Department of Labor, an agency responsible for punishing
violations of labor laws, not collecting revenue.” Ibid.
By contrast, the taxes in Section 4980H are assessed and collected exclusively by the IRS. Pet. App.
54a.4 Section 4980H has no scienter requirement. Id.
4
Petitioners incorrectly state (Pet. 28) that Section 4980H is
incorporated by reference into the Employee Retirement Income
Security Act of 1974 (ERISA), 29 U.S.C. 1001 et seq., and thus can
16
at 56a.5 And the amount of the tax in Section 4980H
is proportionate and not punitive. Ibid. If Liberty
University “offers adequate health coverage, but that
coverage fails to satisfy” the Act’s “affordability and
minimum value requirements, Liberty will be taxed
$3000 times the number of employees who receive” a
premium tax credit or cost sharing reduction for
health coverage purchased on an exchange, “prorated
on a monthly basis and subject to a cap.” Ibid. (citing
26 U.S.C. 4980H(b)(1)-(2). “And if Liberty fails to
offer adequate health coverage to its full-time employees, it will be taxed $2000 times thirty less than
its number of full-time employees—presumably all of
whom are being deprived of coverage—prorated over
the number of months for which Liberty is liable.”
Ibid. (citing 26 U.S.C. 4980H(a), (c)(1) and (2)(D)(i)).
b. The employer responsibility provision is also independently authorized by Congress’s commerce
power. Section 4980H addresses the health coverage
benefits that large employers offer their full-time
employees and their dependents. Health coverage
benefits form part of an employee’s compensation
package, and it is well established that the commerce
power permits Congress to regulate the terms and
conditions of employment. See, e.g., United States v.
Darby, 312 U.S. 100, 117-124 (1941) (Fair Labor
Standards Act of 1938, 29 U.S.C. 201 et seq.); NLRB v.
be enforced by the Department of Labor. Although certain provisions of the Act are incorporated by reference into ERISA, see
29 U.S.C. 1185d, Section 4980H is not among them.
5
Petitioners contend (Pet. 27) that Section 4980H does in fact
“include a scienter requirement,” but they cite no provision of the
statute embodying such a requirement (and there is none).
17
Jones & Laughlin Steel Corp., 301 U.S. 1, 33-43 (1937)
(National Labor Relations Act, 29 U.S.C. 151 et seq.).
Congress has long regulated employee benefits
such as health care benefits, pensions, disability benefits, and life insurance benefits through the Employee
Retirement Income Security Act of 1974 (ERISA), 29
U.S.C. 1001 et seq., and other statutes. Other federal
laws, such as the Americans with Disabilities Act, 42
U.S.C. 12101 et seq., and Title VII of the Civil Rights
Act of 1964, 42 U.S.C. 2000e et seq., bar discrimination
in the context of employment. Petitioners do not
question the validity of these longstanding federal
statutes. Yet Section 4980H is “simply another example of Congress’s longstanding authority to regulate employee compensation offered and paid for by
employers in interstate commerce.” Pet. App. 42a.
The provision of health coverage substantially affects
commerce, just as other forms of compensation and
terms of employment do, and the businesses run by
large employers likewise substantially affect commerce. See id. at 44a-47a (noting various ways in
which employment-based health coverage substantially affects interstate commerce).
Petitioners rely (Pet. 17) on United States v. Lopez,
514 U.S. 549 (1995), and United States v. Morrison,
529 U.S. 598 (2000), but, in those cases, the noneconomic nature of the regulated conduct was crucial to
the Court’s decisions. See Gonzales v. Raich, 545 U.S.
1, 25 (2005). In Lopez, the Court addressed a federal
statute that banned gun possession near schools, and
found that the statute was beyond Congress’s commerce power because it had “nothing to do with ‘commerce’ or any sort of economic enterprise, however
broadly one might define those terms.” 514 U.S. at
18
561; see Morrison, 529 U.S. at 610 (“[T]he noneconomic, criminal nature of the conduct at issue [in
Lopez] was central to our decision in that case.”).
In Morrison, the Court invalidated a statute that
created a civil damages remedy for victims of gendermotivated violence, stressing that “[g]ender-motivated
crimes of violence are not, in any sense of the phrase,
economic activity.” 529 U.S. at 613; see id. at 601-602.
Similarly, in NFIB, Chief Justice Roberts concluded
that Section 5000A could not be upheld under the
commerce power because the affected individuals are
not necessarily engaged in any commercial activity.
See 132 S. Ct. at 2587 (reasoning that the commerce
power does not permit Congress to require individuals
who are “doing nothing” to purchase health insurance). By contrast, large employers are, “by their
very nature, engaged in economic activity.” Pet. App.
43a. Section 4980H addresses “existing economic
activity (employee compensation), and therefore
stands on quite a different footing from” Section 5000A. Id. at 44a.
2. a. The court of appeals correctly rejected petitioners’ religion-based challenges to the employer
responsibility provision and minimum coverage provision. Its decision does not conflict with any decision of
another court of appeals or of this Court.
The premise of petitioners’ religion-based claims is
that the minimum coverage and employer responsibility provisions require petitioners to subsidize or facilitate abortion. See Pet. App. 58a. However, as the
court of appeals explained, “[t]he Act specifically
provides individuals the option to purchase a plan that
covers no abortion services except those for cases of
rape or incest, or where the life of the mother would
19
be endangered.” Id. at 60a-61a (citing 42 U.S.C.
18054(a)(6) (requiring that at least one plan on each
exchange exclude non-excepted abortions from coverage)). In addition, the Act “does nothing to prevent
employers from providing such a plan.” Id. at 61a.
“Furthermore, the Act allows an individual to obtain,
and an employer to offer, a plan that covers no abortion services at all, not even excepted services.” Ibid.
(citing 42 U.S.C. 18023(b)(1)(A)(i)). Finally, the Act
provides that “[a] State may elect to prohibit abortion
coverage in qualified health plans offered through an
Exchange in such State if such State enacts a law to
provide for such prohibition.” 42 U.S.C. 18023(a)(1).
Contrary to petitioners’ assertion, the Act does not
require “that individuals and employers pay at least
one dollar per person per month directly into an account to cover elective abortions[.]” Pet. App. 61a n.9;
see Pet. 36-37. The provision on which petitioners
rely “applies only if individuals choose to enroll in a
plan through a health insurance exchange that elects
to cover abortions, for which federal funding may not
be used.” Pet. App. 61a n.9 (emphasis added) (citing
42 U.S.C. 18023(b)(1)(B)(i) and (2)(A)-(B)). Moreover,
as petitioners acknowledge (Pet. 36), insurers that
elect to cover such abortions must give notice of that
coverage in the summary of benefits provided at initial enrollment.
For these reasons, the employer responsibility and
minimum coverage provisions of the Act do not substantially burden petitioners’ exercise of religion, and
their challenges under RFRA and the Free Exercise
Clause fail.
b. Petitioners’ contention (Pet. 29-33) that the two
religious exemptions in the minimum coverage provi-
20
sion cause that provision to violate the Free Exercise
Clause is equally meritless. A law violates the Free
Exercise Clause if it has “the unconstitutional object
of targeting religious beliefs and practices” for disfavored treatment. City of Boerne v. Flores, 521 U.S.
507, 529 (1997) (citing Church of Lukumi Babalu Aye,
Inc. v. City of Hialeah, 508 U.S. 520, 533 (1993)). That
“Clause does not compel Congress to exempt religious
practices from a ‘valid and neutral law of general
applicability.’ ” Pet. App. 59a (quoting Employment
Div., Dep’t of Human Res. v. Smith, 494 U.S. 872, 879
(1990)). Here, however, Congress has created two
exemptions in Section 5000A as a matter of religious
accommodation. Contrary to petitioners’ suggestion
(Pet. 30-32), those two accommodations do not suggest
that Section 5000A, in its general operation, targets
religious practices for disfavored treatment.
The “health care sharing ministry” exemption applies to members of tax exempt organizations that,
among other things, have since 1999 shared a common
set of ethical or religious beliefs; shared medical expenses among their members in accordance with those
beliefs; and allowed individuals to retain membership
even after they develop a medical condition. See 26
U.S.C. 5000A(d)(2)(B). The “religious conscience”
exemption incorporates a longstanding provision of
the Internal Revenue Code that applies to individuals
who adhere to established tenets or teachings of religious sects in existence since 1950 that are conscientiously opposed to acceptance of the benefits of any
private or public insurance.
See 26 U.S.C.
5000A(d)(2)(A) (incorporating the definition of “religious sect” in 26 U.S.C. 1402(g)(1)).
21
This Court addressed Section 1402(g) in United
States v. Lee, 455 U.S. 252 (1982), and the Court’s
reasoning applies equally to the religious exemptions
in Section 5000A. The Court explained in Lee that, in
Section 1402(g), “Congress has accommodated, to the
extent compatible with a comprehensive national program, the practices of those who believe it a violation
of their faith to participate in the social security system.” 455 U.S. at 260. “Congress granted an exemption, on religious grounds, to self-employed Amish and
others,” and thus confined the exemption to “a narrow
category which was readily identifiable.” Id. at 260261. Like the religious exemption in Section 1402(g),
the religious exemptions in Section 5000A do not
differentiate among religious sects. Far from burdening religion, they accommodate religious exercise to
the extent consistent with Congress’s overall objectives.
3. There are threshold jurisdictional problems that
would prevent this Court from reaching the merits of
petitioners’ challenges to Sections 4980H and 5000A,
even if those claims otherwise warranted further review.
First, notwithstanding the court of appeals’ contrary conclusion (Pet. App. 25a-30a), Liberty’s preenforcement challenge to Section 4980H, the employer
responsibility provision, is barred by the AntiInjunction Act, which provides that “no suit for the
purpose of restraining the assessment or collection of
any tax shall be maintained in any court by any person, whether or not such person is the person against
whom such tax was assessed.” 26 U.S.C. 7421(a). In
determining that the Anti-Injunction Act did not bar
pre-enforcement challenges to Section 5000A, the
22
minimum coverage provision, this Court in NFIB
“found it most significant that Congress chose to describe the shared responsibility payment as a ‘penalty’
rather than a ‘tax.’ ” Pet. App. 26a-27a (quoting
NFIB, 132 S. Ct. at 2583).
Here, by contrast, Congress described the assessment in Section 4980H, the employer responsibility
provision, as a “tax.” Section 4980H(b)(2) places a cap
on the “aggregate amount of tax” that an employer
may owe under that provision. Section 4980H(c)(7)
provides that the “tax imposed by” Section 4980H is
“nondeductible.”
And Section 4980H(c)(7) crossreferences Section 275(a)(6) of the Internal Revenue
Code, which provides that no tax deduction is allowed
for “[t]axes imposed by chapters 41, 42, 43, 44, 45, 46,
and 54.” The “tax” imposed by the employer responsibility provision is nondeductible because it is one of
the “[t]axes imposed by” chapter 43. Ibid.; see 26
U.S.C. 4980H. And in a separate provision, codified in
Title 42, Congress also referred to the “tax imposed
by [S]ection 4980H.” 42 U.S.C. 18081(f)(2)(A). Because the exaction imposed by Section 4980H is a
“tax,” this challenge is barred by the plain terms of
the Anti-Injunction Act, regardless of the fact that in
other portions of Section 4980H Congress also referred to the “tax” as an “assessable payment” and
once as an “assessable penalt[y].” Pet. App. 27a
(brackets in original).
Moreover, Liberty University and the two individual petitioners failed to establish standing to bring
pre-enforcement challenges to Section 4980H and
Section 5000A, respectively. Cf. Pet. App. 30a-35a.
To establish standing, petitioners must demonstrate
that those provisions will cause them “certainly im-
23
pending” injury. Clapper v. Amnesty Int’l USA, 133
S. Ct. 1138, 1147 (2013) (citation omitted). Liberty
University currently “offers healthcare coverage to its
full-time employees.” 2d Am. Compl. ¶ 62. Thus, as
the court of appeals acknowledged, it is speculative
whether Liberty University will owe any tax under
Section 4980H. Pet. App. 31a-32a & n.5.6 The court
noted that Liberty University alleged that Section
4980H and its “attendant burdensome regulations will
. . . increase the cost of care” and “directly and
negatively affect [it] by increasing the cost of providing health insurance coverage.” Id. at 32a. These
allegations, however, are premised on Liberty University’s incorrect assertion that the coverage it offers its
full-time employees will not qualify as “minimum
essential coverage” unless the plan covers a defined
set of “essential health benefits.” Pet. 7. As the court
of appeals recognized elsewhere in its opinion, the
term “essential health benefits” refers to the benefits
that must be provided by plans in the individual and
small group markets and does not apply to plans offered by large employers such as Liberty University.
Pet. App. 72a n.12.
The individual petitioners (Michele Waddell and
Joanne Merrill) failed to establish standing to chal6
As the court of appeals explained, “minimum essential coverage” includes coverage under any employer-sponsored plan, unless
that plan covers only excepted benefits (such as dental benefits).
Pet. App. 31a n.5 (citing 26 U.S.C. 4980H(a) (cross-referencing the
definition of “minimum essential coverage” in 26 U.S.C.
5000A(f) (2)-(3)). Liberty University does not claim to offer only
excepted benefits. See ibid. Moreover, Liberty University alleged
only that its coverage “could” fail to meet the statute’s affordability criteria but did not allege any facts to support that hypothetical possibility. Ibid.
24
lenge Section 5000A because their allegations do not
show that either individual will be injured by that
provision. In NFIB, this Court held that individuals
may choose to make the shared responsibility payment in Section 5000A “in lieu of buying health insurance.” 132 S. Ct. at 2597. Individuals with income
below a certain threshold are exempt from that payment. See id. at 2580. Moreover, individuals may be
exempt under various hardship exemptions. See 78
Fed. Reg. 39,525 (July 1, 2013) (to be codified at 45
C.F.R. 155.605(g)). Petitioners’ allegations do not
address those exemptions or show that either individual petitioner will be required to make a payment if
she does not have health coverage when Section 5000A
takes effect in 2014. The second amended complaint
alleged that Ms. Waddell was “not presently employed” and did not provide any information with
respect to Ms. Merrill’s income or employment. 2d
Am. Compl. ¶¶ 34, 38. The allegations thus did not
show that Section 5000A will cause either individual
certainly impending injury.
4. Finally, the court of appeals acted well within its
discretion when it declined to consider petitioners’
challenges to preventive-services coverage regulations
that implement 42 U.S.C. 300gg-13. No such claims
were alleged in the second amended complaint, considered by the district court, raised on petitioners’
first appeal, or asserted before this Court. See Pet.
App. 68a-74a. “Finding no circumstance justifying a
premature resolution of [petitioners’] new arguments
and compelling reasons for refusing to do so in this
case,” the court of appeals reasonably declined to
address petitioners’ new claim raised for the first time
on appeal—and even then only after the remand by
25
this Court in response to their certiorari petition raising other claims. Id. at 75a. That case-specific and
discretionary procedural ruling does not warrant this
Court’s review.
Moreover, after the court of appeals issued the decision below, new regulations were published that
allow non-profit religious organizations with religious
objections to contraceptive coverage to obtain a religious accommodation, under which the organization is
not required to contract, arrange, pay, or refer anyone
for contraceptive coverage or services. See 78 Fed.
Reg. 39,870 (July 2, 2013). The petition does not even
mention those regulations, much less claim that Liberty would not be eligible for an accommodation under
them. To the extent Liberty believes that application
of the contraceptive-coverage requirement to it violates RFRA or the Free Exercise Clause, notwithstanding this accommodation, the place to assert that
claim for the first time is in the district court, not
here.
The contraceptive-coverage cases that petitioners
cite (Pet. 34-35, 40-44) were brought by for-profit
corporations that are not eligible for the accommodation just discussed. Moreover, the government has
filed a petition for a writ of certiorari seeking review
in one of those cases. See Sebelius v. Hobby Lobby
Stores, Inc., petition for cert. pending, No. 13-354
(filed Sept. 19, 2013); see also Autocam Corp. v. Sebelius, petition for cert. pending, No. 13-482 (filed Oct.
15, 2013) (also involving challenge by for-profit corporation to contraceptive-coverage requirement); Conestoga Wood Specialties Corp. v. Sebelius, petition for
cert. pending, No. 13-356 (filed Sept. 19, 2013) (same).
That petition, not this one, presents the proper vehicle
26
to address the current circuit conflict about RFRA
challenges to the contraceptive-coverage requirement
brought by for-profit employers.7
CONCLUSION
The petition for a writ of certiorari should be denied.
Respectfully submitted.
DONALD B. VERRILLI, JR.
Solicitor General
STUART F. DELERY
Assistant Attorney General
MARK B. STERN
ALISA B. KLEIN
Attorneys
OCTOBER 2013
7
Because Liberty University is not similarly situated to the forprofit employers in Hobby Lobby, Conestoga Wood, and Autocam,
and because petitioners did not adequately raise their
contraceptive-coverage claim below (thus leading the court of
appeals not to address it), there is no reason to hold this petition
for the final disposition of those cases.